Week 43: Capitalism, Climate Crisis and the Big Empty

Dear all,?

The losses, the losers and the big delusion. Unsustainable behaviour still gives the highest returns. I tried to collapse my feelings into that numb, wordless feeling. Emptiness tastes like burned corn fields and empty wet roads. Royal emptiness.

What happens to the heart when you read this?

The world is on track for 2.6C by 2100 ??

The climate pledges made by countries worldwide are woefully inadequate and put the world on track for a temperature rise of between 2.4C and 2.6C by 2100, the leading UN environmental body has forecast , with the fatal effects of global warming already evident.

The latest analysis by the UN Environment Programme (UNEP) of the targets announced by 194 countries, accounting for more than 90 per cent of all greenhouse gases, said there was?“no credible pathway to 1.5C in place”,?referring to the Paris agreement to limit global warming. Temperatures have already risen at least 1.1C in the industrial era.

Although countries pledged at the UN climate summit a year ago to revisit and strengthen their 2030 emissions targets by the end of this year, few have done so. They include previous laggards such as Australia and Indonesia.

While the leading emitters, the US and China, have sped up their deployment of renewable energy, their climate goals have not improved. The updated targets announced by countries this year would shave less than 1 percent off projected 2030 emissions – a far cry from the 45 percent fall required to limit global warming to 1.5C, said UNEP.

Global energy-related carbon emissions rebounded after the pandemic to the highest level in history in 2021 at 36.6bn tonnes, and the annual rise in methane concentrations in the atmosphere was the largest since records began, according to the World Meteorological Organization.

Research by BNY Mellon Investment Management and Fathom Consulting estimated this week that about $20tn of polluting assets might need to be “scrapped or retrofitted” before the end of their useful lives by 2050.

Why are we failing?

“Most financial actors, despite stated intentions, have shown limited action on climate mitigation because of short-term interests, conflicting objectives and not recognising climate risks adequately,” said the UNEP.

Short-term interests. Full stop. Concrete, sharp, true and tragic. Our current economic system, capitalism, is by no means sustainable, even on the paper. The current form of capitalism is unable to place any value whatsoever on and existential global risk. Global risks are too high, and the benefits of transitioning to global sustainable development are not recognised. We are failing over and over again. Economics is not a science but a reflection of our social values – and what is wrong with our values? Why are we so afraid??

• Our economic system builds on linear principles focused on throughput, optimization and cost-benefit efficiency. We exploit, create value, and then waste. There is no such thing as a Fourth Industrial Revolution with 9 billion thriving co-citizens in the world, if it is accomplished on linear economic principles. We need a transition to circular economic principles and practice.
• Despite recognition by many economists, the economy remains frustratingly locked in the tragedy of the commons. Economic growth comes with unaccounted environmental costs and with it, rising risks of catastrophe. The economy remains unable to internalize real Earth costs. Today, the number one economic threat to humanity is our inability to value nature. This is not only about monetization. Sure, valuing natural capital and ecosystem services is critical. A global price on carbon is necessary. But it is, as science and myriad attempts have shown, not easy and not always possible (particularly to get the right price). So, valuing nature also means that we have to accept leaving the realm of economics. We enter the realm of ethics, inclusiveness and justice.
• Economies can exploit the environment with seemingly no or limited impacts. This is possible when we have abundant biodiversity, redundant atmosphere and glacial capacity to absorb greenhouse gases and pollution. When resilience has been drained following long periods of linear change, the environment can abruptly shift. Tipping points are crossed, triggering large system shifts, often irreversible, potentially catastrophic.
• When costs for society go from predictable to non-predictable, from manageable to potentially infinitely dangerous, then we can no longer use market based discount rates to assess where it is most cost-effective to place our investments. In essence this means that in a non-linear world - where Earth sends invoices - the conventional economic theory falls apart.
• There is an old belief that solving environmental problems can only be achieved by first building enough economic wealth, so we can “afford to save the environment”. This “Kuznets Curve” thinking has never been correct and must be abandoned once and for all if we are serious about economic development for a thriving humanity on Earth.?

Read more here .

Financial Net Zero No More

And here is another reason for emptiness. When Carney launched Glasgow Financial Alliance for Net Zero (Gfanz) last year, the tight partnership with Race to Zero was a central part of the package. It was touted as an answer to those who worried that this grouping of wealthy financial executives might be tempted to soft-pedal on aggressive climate measures – and that the whole initiative could be an unhelpful distraction from the push for serious action by governments and legislatures.

Since then, Gfanz has come under heavy public pressure – severe enough to make some wonder if it could fall apart entirely. Big US banks have threatened to quit, having been accused by Republican politicians of neglecting fiduciary duty for the sake of a “woke” agenda. Legal experts warned that the Race to Zero’s guidance against support for fossil fuel projects could fall foul of antitrust laws against co-ordinated action by companies.

You can read Gfanz’s “progress report” here . And if you feel empty, please don’t. At least it sounds great...?

The climate crisis? It’s capitalism

The cynical truth is that it is only “thanks” to poverty that we do not have very dangerous climate change already. People in low income nations are responsible for far less emissions every year.

Moreover, economic growth, as shown by Piketty and others, does not trickle down to the poor. An inequity aggravated by the fact that the economic wealth in the world so far is accomplished through unsustainable subsidies from the planet, while the cost for these subsidies are largely taken up by others, in general the poorest communities.?Read more .

The losses are colossal, losers are mostly poor people around the world together with lower-middle and working class in the west, and delusion is what we call solutions based on the economic system that simply is not fit for the purpose of addressing problems that sustain it.

We need an alternative economic model and we need it yesterday. Unless we find a way to create it, we are doomed to a lot of wordless emptiness. For some it will be a comfortable emptiness behind the thick walls of well-guarded, video-surveyed, alarm-secured, richly-fed, yet empty realities.?

Globalization has left a great portion of Western society feeling forgotten and afraid. Similar to the popular revolutions of 1789 and 1917, a large portion of society feels ignored by a greedy, aloof class of elites.

The West’s liberal leaders have failed time and time again to listen, while populists capitalize on the contagion of desperation. It is time for leaders to curb the privilege and power of the wealthiest fifth, including their own.

Maybe an article like this can brighten up the valley of shadows we are dwelling in. Where is the angry middle-class revolution?

I wish you all a real and not so empty week!

Kind regards,

Sasja

___

To receive 'ESG on a Sunday' in your inbox,?subscribe on Substack .